MDRM Modern Mobility Aids Inc (PK)

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below and other information contained in this report before making a decision to acquire shares of our common stock. Any of the events discussed in the risk factors below may occur. If they do, our business, results of operations or financial condition could be materially adversely affected.

We have been mainly dependent upon the funds provided to us by our shareholders who are not obligated to provide us the funds necessary for us to continue as a going concern.

We are a startup company and we have no operations.  We will need additional funds to initiate any business or to acquire a business or any assets we wish to acquire . There is no assurance that any additional financing will be available, or if available, on terms that will be acceptable to us.  If we are not able to obtain needed financing, we may have to cease operations. Even if we raise the funds necessary to acquire a business, there can be no assurance that such business will be successful or that we will be able to continue as a going concern. 

Any industry in which the Company operates will likely be highly competitive and the Company’s competitors may be larger and may have greater financial resources than the Company does.

Given our limited resources and limited business experience we will likely face strong competition with respect to any business we engage in from competitors which will have greater experience and have substantially more resources then we have . The strong competition that we will face may have a material adverse effect on our business.

The company is subject to certain risks in our international operations

We expect that most of our sales will initially be generated outside the United States of America. Accordingly, we will be subject to a number of risks, any of which could harm our business, relating to doing business internationally, including:

1. Exchange controls and currency exchange rates;

2. Inflation;

3. Political and economic issues in foreign countries;

4. Foreign tax treaties and policies;

5. Restrictions on the transfer of funds to and from foreign countries; and

6. General economic conditions where end users of the company’s products reside.

Fluctuations in foreign currency exchange rates could harm our results of operations.

We expect to conduct business outside the U.S. As a result, we will be exposed to gains and losses resulting from the effect of fluctuations in foreign currency exchange rates. Currency exchange rates are subject to fluctuation due to, among other things, changes in local, regional or global economic conditions, the imposition of currency exchange restrictions and unexpected changes in regulatory or taxation environments. Significant fluctuations in foreign currency exchange rates may adversely affect any business in which we are engaged.

We lack an operating history and have losses which we expect to continue into the future.  There is no assurance our future operations will result in profitable revenues.  If we cannot generate sufficient revenues to operate profitably, our business will fail.

We were incorporated on December 19, 2007, have realized $9,506 in revenues and incurred $585,040 in losses since inception.  We have very little operating history upon which an evaluation of our future success or failure can be made.  This is particularly true due to our abandonment of the business we previously operated and changes in our Board of Directors and executive officers. Any revenues we do generate may not be sufficient to cover our operating costs.  We cannot guarantee that we will be successful in generating significant revenues in the future.  Failure to achieve a sustainable sales level will cause us to cease all operations.

There is substantial uncertainty as to whether we will continue operations. 

Our registered independent auditors have discussed their uncertainty regarding our business operations in their audit report for the year ended June 30, 2013.  This means that there is substantial doubt that we can continue as an ongoing concern for the next 12 months.  The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business.  As such, we may have to cease operations and you could lose your entire investment.

We depend on key personnel.

Our future success will depend in large part on the continued service of our executive officers.  We have not entered into an employment agreement with any of them. If any of our executive officers choose to leave the company we will face significant difficulties in attracting a potential replacement candidates due to our limited financial resources and operating history.

Our officers and directors are not obligated to commit their time and attention exclusively to our business and therefore they may encounter conflicts of interest with respect to the allocation of time and business opportunities between our operations and those of other businesses.

Our officers and directors are not obligated to commit their time and attention exclusively to our business and, accordingly, they may encounter conflicts of interest in allocating their own time, or any business opportunities which they may encounter, between our operations and those of other businesses.

Currently, our executive officers are under no obligation to commit any time to us, and their failure to do so may adversely affect our ability to continue as a going concern.

Additionally, officers and directors, in the course of their other business activities, may become aware of investment, business or information which may be appropriate for presentation to us as well as to other entities to which he owes a fiduciary duty or in which he is involved. They may also in the future become affiliated with entities that are engaged in business or other activities similar to those we intend to conduct. As a result, they may have conflicts of interest in determining to which entity particular opportunities or information should be presented. If, as a result of such conflict, we are deprived of investment, business or information, our ability to initiate any business may be adversely affected.

We do not intend to pay dividends.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future.  Furthermore, we require additional funding and our funding sources may prohibit the payment of dividends.  Because we do not intend to declare dividends, any gain on an investment in Modern Mobility Aids will need to come through appreciation of the price of our common stock.

Holders of our common stock may have limited recourse against us and since two of our three directors and executive officers reside outside the United States.

Two of our three directors and executive officers reside outside the United States and the non-United States resident officers and directors assets are located outside the United States. As a result, holders of our common stock may be limited in their ability to effect service of process within the United States upon our non-United States resident directors and executive officers or to enforce in a U.S. court a judgment obtained against them in jurisdictions outside the United States, including actions under the civil liability provisions of U.S. securities laws. In addition, it may be difficult for holders of our common stock to enforce, in original actions brought in courts in jurisdictions outside the United States, liabilities predicated upon U.S. securities laws.

Because our majority shareholder owns 66.5% of our outstanding common stock, he can make and control corporate decisions that may be disadvantageous to other minority shareholders.

Mr. Karatella owns 66.5% our outstanding common stock at the present time.  Accordingly, he will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations, acquisitions and the sale of all or substantially all of our assets.  He will also have the power to prevent or cause a change in control.  His interests may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.

The requirements of being a public company have and will continue to strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

As a public company, we are subject to certain reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Sarbanes-Oxley Act and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We may not be able to invest the resources necessary to comply with evolving laws, regulations and standards, which may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

We also expect that being a public company and complying with the rules and regulations related thereto will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. We do not have director and officer liability insurance at this time. These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors and qualified executive officers.

There is a limited public (trading) market for our common stock and there is no assurance that our common stock will ever be actively traded; therefore, our investors may not be able to sell their shares.

Our common stock is listed on the OTC Markets, Pink Sheets, and trading has generally been very limited. We can provide no assurance that an active market for our common stock will ever develop.  When it does trade, our shares are often traded at less than $0.01 per share. As a result, stockholders may be unable to liquidate their investments, or may encounter considerable delay in selling shares of our common stock.  An active trading market may not develop in the future, and if one does develop, it may not be sustained.  If an active  trading market does  develop,  the  market  price of our  common  stock is 

likely to be highly volatile due to, among other  things,  because we are a relatively new public company with a limited operating  history.  Further, even if a more active public market develops, the volume of trading in our common stock will presumably be limited and likely be dominated by a few individual stockholders.  The limited volume, if any, will make the price of our common stock subject to manipulation by one or more stockholders and will significantly limit the number of shares that one can purchase or sell in a short period of time.  The market price of our common stock may also fluctuate significantly in response to the following factors, most of which are beyond our control:

The equity markets have, on occasion,  experienced  significant price and volume fluctuations that have affected the market prices for many companies' securities and that  have  often  been  unrelated  to the  operating  performance  of these companies.  Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance.  As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.

You could be diluted due to our future issuance of capital stock and derivative securities.

As of May 20, 2014, we had 195,480,000 shares of common stock outstanding and no shares of preferred stock outstanding.  We are authorized to issue up to 200,000,000 shares of common stock and 1,000,000 shares of preferred stock.  To the extent of such  authorization,  our Board of  Directors  will have the  ability, without seeking stockholder approval, to issue additional shares of common stock or  preferred  stock  in the  future  for  such  consideration  as the  Board of Directors may consider  sufficient.  The issuance of additional common stock or preferred stock in the future may reduce your proportionate ownership and voting power. Also, any shares of preferred stock the Company issues may have preferences as compared to our common stock and reduce the likelihood of a change of control of the Company in the future.

A lack of internal control over financial reporting has, and could result in the future, in an inability to adequately and timely report our financial results, which could lead to a loss of investor confidence in our financial reports and have an adverse effect on our stock price.

Effective internal controls are necessary for use to provide reliable and timely financial reports. We have been unable to provide timely financial reports due to a lack of financial resources necessary to retain qualified individuals with the relevant accounting experience. Our management has concluded that we had a material weakness in our internal controls over financial reporting.

A failure to maintain effective internal control over financial reporting could result in a material misstatement of our financial statements or otherwise cause us to fail to meet our financial reporting obligations. This, in turn, could result in a loss of investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our business, financial condition, operating results and our stock price, and we could be subject to stockholder litigation and the costs associated therewith.

Our common stock is classified as a “Penny Stock” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our common stock will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a Penny Stock.

The SEC has adopted regulations which generally define so-called "penny stocks" to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. As of June 2,

2014, the closing sale price of our common stock was less than $1.00] per share and, therefore, it is designated a "penny stock." As a "penny stock," our Common Stock likely is subject to Rule 15g-9 under the Exchange Act of 1934, or the "Penny Stock Rule." This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and "accredited investors" (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses).

For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased.  In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form, sets forth:

The basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of selling shareholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our Common Stock. In addition, the liquidity for our Common Stock may decrease, with a corresponding decrease in the price of our Common Stock. Our Common Stock, in all probability, will be subject to such penny stock rules for the foreseeable future and our shareholders will, in all likelihood, find it difficult to sell their common stock.

There can be no assurance that our Common Stock will qualify for exemption from the Penny Stock Rule. In any event, even if our Common Stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b) (6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of a penny stock if the SEC determines that such a restriction would be in the public interest.

You may face significant restrictions on the resale of your shares due to state “blue sky” laws.

Each state has its own securities laws, often called “blue sky” laws, which (1) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer must also be registered in that state.

We do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those broker-dealers, if any, who agree to serve as market makers for our common stock. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities. You should therefore consider the resale market for our common stock to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.